21 May 2012

2 minute read

Oceania

This is having implications for livestock prices back on home soil.

Since the onset of the GFC in late 2008, demand for lower priced Australian beef products has been relatively robust – at times positively surging.

This has occurred despite the rising A$ reducing the price competitiveness of Australian product. In contrast, demand for high quality and high priced beef cuts have experienced a tumultuous period, led by the very difficult trading environment to Japan, Australia’s largest beef export market.

Manufacturing beef price surge

Demand and prices for manufacturing and lower priced beef has been high while interest in high quality beef has been low.

The global benchmark for manufacturing beef is known as 90CL in the US and commonly used in the production of hamburger patties in the foodservice trade.

Its global benchmark surged to record highs in early 2012, driven by a combination of falling US beef production and robust global competition from the world’s three largest beef importers US, Japan and Russia.

What about the premium cuts?

With Australia’s trade heavily focused on North Asia, the combination of the higher A$, sluggish demand for higher priced beef and increased competition from the US has influenced returns, especially for chilled beef.

One of the most heavily impacted sectors has been the chilled grainfed market, with returns for Australian exports of chilled shortfed fullsets averaging eight per cent below the five-year average in the first two months of 2012.

Chilled strip loins and tenderloins have also averaged well below the five year average.

This trading environment for Australian beef exports has been displayed in several ways to producers, most visibly in sustained strong returns for cows (traditionally sourced for manufacturing beef), while returns for heavy grainfed animals have been weaker.

TheCattleSite News Desk